How does GE Shipping look post-demerger?

Great Eastern  Shipping Company scheme of demerger will be effective from October 16, 2006. The Board of Directors had earlier approved the demerger of its offshore services business into a separate company, Great Offshore.

GE Shipping has fixed November 15 as record date of the demerger. Trading in GE Shipping will be suspended five days before the record date. It will re-list within 21 days of the record date with reduced equity of Rs 152 crore. Great Offshore will list within 15 days of GE Shipping re-listing with an equity of Rs 38 crore.

Nikhil Vora of SSKI says that he sees a 15% upside in the GE Shipping stock price. He would recommend a 'Buy' on GE Shipping at current levels, he says.

Excerpts from CNBC-TV18's interview with Nikhil Vora:

Q: How have you read the news ?

A: This announcement was obviously anticipated over last month or so, since the time they went in for a revision of the demerger. The price build-up has been smooth and I think it also takes into account the smart increase in the overall stock market. And I think the demerger will obviously only create more value from here.

Q: What is your sum of parts value for the two businesses now, it is already at Rs 310?

A: We had a sum of part of around Rs 315 but that was around six monthss back and obviously post that, there has been a pretty significant uptake in the overall street market. There also has been some acquisition from the offshore front, which needs to be built in. I would not be surprised if we look at another 10-15% upside from here.

Q: So closer to Rs 350 you think?

A: Might be slightly crude right now to put a number to this, but yes, could be closer to that number.

Q: Have most issues been ironed out, you think in terms of the differences they had with one of their biggest clients?

A: Yes, obviously that is the reason why the demerger date is really available right now, I think the big picture story in GE Shipping right now is to look at the fact that now you have a consolidated shipping business and an offshore business and within shipping, you also have an offshore entity, which is starting to spring up. So I think the scale of the business can be far more sharp from here on. Also the incremental asset acquisition.

Q: Given the upside, you just pointed out, would you still buy GE Shipping at Rs 310?

A: Yes, we would be buying it.